Bally Company has three productlines: A, B and C. The following annual information isavailable:

Product A Product B Product C

Sales $60,000 $90,000 $24,000

Variable costs 36,000 48,000 20,000

Contribution margin 24,000 42,000 4,000

Avoidable fixed costs 9,000 18,000 3,000

Unavoidable fixed costs 6,000 9,000 2,400

Operatingincome(loss)$9,000 $15,000 $(1,400)

Assume Bally Company drops Product C. What will happen to operatingincome?

A.

decrease by$1,000

B.

increase by$3,800

C.

decrease$1,400

D.

increase by$1,400